Tariffs: New Trump Administration Imposes, Delays, Some Tariffs; Prospects for Challenges Remain Unclear

On February 1, 2025, the Trump Administration signed into effect three executive orders (“E.O.”) announcing the imposition of additional tariffs on Canada, Mexico, and China. This action came following the Trump Administration’s January 20, 2025, trade policy memorandum unveiling its new “America First Trade Policy” which set out a broad spectrum of potential trade and tariff actions, including tariff actions aimed at protecting certain sectors, and addressing unfair and deceptive practices by other countries. The February 1st E.O. imposed on Canada an additional tariff of 25% on all “products of Canada” except for “energy or energy resources” which were subject to a separate additional 10% tariff. Turning to Mexico, the E.O. similarly imposed a tariff of 25% on all “products of Mexico.” Lastly, the E.O. imposed an additional tariff of 10% on “all products” of China. However, after tense negotiations, the Trump Administration reached short term accommodations with the Canadian and Mexican governments, resulting in a one-month suspension on the aforementioned tariffs. The additional tariffs on China, however, went into effect on February 4, 2025.

Building on that action, the Trump Administration on February 9, 2025, additionally announced that starting today the U.S. would impose a 25% tariff on all foreign steel and aluminum imports into the United States, and that other tariff related action would be imposed later this week.

In this post we will discuss the statutory authority behind those new tariffs along with providing relevant recommendations and advice to our clients as they navigate the new Trump Administration’s increased implementation of tariffs.

The Statutory Authority of IEEPA

Historically, the first Trump Administration utilized statutory processes to impose tariffs, which first required trade investigations under Sections 201, 232, and 301 of the Trade Act of 1974 (the “Trade Act”). However, the new Trump Administration has attempted to shift away from that authority, following a new approach under the International Emergency Economic Powers Act, 50 U.S.C. 1701, et seq. (“IEEPA”) to authorize significantly broader tariffs after President Trump’s declaration of a national emergency.¹ IEEPA is also the statutory authority that underlies most U.S. sanctions programs, and although IEEPA previously has not been used by any U.S. president to impose tariffs on foreign countries, it may procedurally allow for a more immediate imposition of tariffs rather the previously relied upon Trade Act. We note that while Congress can technically terminate President Trump’s emergency declaration, this is very unlikely.

Challenges and How to Proceed With the New Trump Administration’s Stance on Tariffs

The recent action is likely the beginning of a larger roll-out of tariffs by the Trump Administration. While it is unclear how the recently announced, and largely postponed tariffs, will function, there is significant discussions around additional country specific tariffs being announced. Specifically, on January 26, 2025, President Trump threatened 25% tariffs on Columbian-origin products following a diplomatic dispute with the Columbian government. These recent actions highlight a growing interest in the new Trump Administration to use these tariffs as a bargaining chip in negotiations with other nations. As noted above, President Trump has also instated tariffs on foreign steel and aluminum imports, while signaling additional action to come.

The recent round of tariff measures has not gone unopposed, with China filing a World Trade Organization (“WTO”) complaint on February 5, 2025, against the new 10% tariff on Chinese imports and the cancellation of duty-free exemptions for low-value packages, arguing that the tariffs are examples of protectionist and discriminatory conduct in violation of the WTO’s rules.

Further, while President Trump brought the new wave of tariffs through the statutory authority of IEEPA, it is not entirely clear whether this is a permissible method to impose tariffs on foreign goods. Although, as mentioned above, IEEPA has never been previously used to impose tariffs, in 1971, former President Richard Nixon used a related statute, the Trading with the Enemy Act of 1917, to impose a 10% tariff on all imports into the United States in response to a monetary crisis.

We anticipate domestic challenges to arise against these new tariffs. However, judicial deference to the executive branch on matters of national security could influence the outcome of such challenges.

Lastly, we note that thus far there is no exclusion or exemption process, to these newly implemented tariff measures. By contrast, the U.S. government created a system for companies to request exemptions from previously enacted Section 301 tariffs targeting Chinese goods in 2018. Requests were evaluated on a multitude of factors, including whether the products were “strategically important,” whether substitutes/alternative products were available, and whether the tariffs would impose significant harm on American business. We note the process was administered by the Office of the U.S. Trade Representative, without Congressional oversight or an appeal process. We anticipate that as additional tariffs are announced by the new Trump Administration, and the extensions provided to Canada and Mexico near expiry, that such processes may be given further consideration.

We recommend clients pay close attention to this rapidly developing space, as it is largely unclear how these newly imposed tariffs will be rolled out. These actions also come against a growing increase in trade compliance enforcement by U.S. Customs and Border Protection and U.S. Department of Justice highlighting a growing interest in trade related action. We are available to provide specific guidance surrounding the impact and application of these new tariff programs and any other tariff related actions.

¹ Following the E.O. issued on February 1, 2025, the national emergency is as a result of the “extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl”.

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